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The long-anticipated revamp of the H-1B and other visas in here, and the changes could have a seismic effect on how technology firms utilize the H-1B going forward. Those companies will have to pay their H-1B workers more, and visa applications will undergo a stricter review.

According to the Interim Final Rule issued by the Department of Labor (DOL), the lowest possible wage that a company can pay an H-1B worker will rise from the 17th percentile of a profession’s income distribution to the 45th percentile. Meanwhile, the uppermost tier “will increase approximately from the 67th percentile to the 95th percentile.” (Interim final rules can be implemented without having to go through the usual government review process, meaning this is going into effect within weeks.)

The DOL also faulted the current wage structure for allowing companies to substantially underpay specialists on the H-1B visa, potentially undercutting U.S. workers in the process. “While the prevailing wage levels the [DOL] sets in the H-1B, H-1B1, E-3, and PERM programs are meant to protect against the adverse effects the entry of immigrant and nonimmigrant workers can have on U.S. workers, they do not accomplish that goal—and have not for some time,” reads the runup to the rule. “For starters, the [DOL] has never offered a full explanation or economic justification for the way it currently calculates the prevailing wage levels it uses in these foreign labor programs.” 

Indeed, the rule continues, the current wage levels “provide an opportunity for employers to hire and retain foreign workers at wages well below what their U.S. counterparts,” leading to “downward pressure on the wages of the domestic workforce.” This wage floor ultimately “allows some firms to use H-1B workers as a low-cost alternative to U.S. workers.”

The Department of Labor estimates that H-1B workers are 10 percent of the “IT labor force” in the United States, and 22 percent of the current software developer workforce. Other changes proposed by the agency, including shortened visa lengths for certain kinds of contract workers, as well as tighter education requirements for anyone applying for an H-1B, could drive those percentages substantially lower over the next few years. 

Going forward, the DOL wants H-1B applicants to have a college degree in their actual field; someone with an accounting degree would be rejected if they applied to become a machine-learning specialist or mobile application engineer, for instance. This could reduce instances of consulting and business-services firms hiring H-1B workers for one set of tasks, then subcontracting those workers to a different company for other tasks.

Sarah Pierce, a policy analyst at the Migration Policy Institute, told CBS News that the DOL’s sweeping changes might have gone too far: “There are many problems with the H-1B program, including that there are instances where H-1B workers are replacing U.S. workers. And that's a problem that needs to be dealt with… But the Trump administration is dealing with it by punishing all H-1B workers, and especially those that are working in third-party worksites.”

Meanwhile, the Trump administration is framing this as a protective adjustment to a controversial program. “We're making good on President Trump's promise that he made to the American people nearly four years ago, to restore the integrity to the immigration system, to protect Americans from those who seek to exploit our system for personal gain, and to never forget each and every hard-working American struggling to provide for his or her family,” Ken Cuccinelli, senior official performing the duties of the director, U.S. Citizenship and Immigration Services (USCIS), said on a call with journalists.

The DOL’s new ruling comes the same week as a decision was reached in National Association of Manufacturers, et al. v. U.S. Department of Homeland Security, wherein United States District Judge Jeffrey S. White shot down Trump’s temporary ban on the H-1B and other visas.